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Barton: $5 million win for the underdog

In the real world, Goliath almost always stomps David, the fat cats eat first and the little guy gets his pockets picked by the big guy.

That’s why what happened a year ago was so remarkable.And worth remembering now.

On May 4 last year, the little guy plucked a nice piece of change from the big guy. David knocked out Goliath. The underdog claimed victory and the fat cat got an empty bowl.

That’s the date when the state Department of Agriculture signed a settlement agreement with The Parker Companies, a Savannah-based business, to end a nonsensical legal dispute over whether Parker’s could advertise its discounted gas club pricing on its street signage.

Future students in business schools should study this case. There are lessons to be learned here.

It illustrates how a smart, creative and doggedly persistent business person can turn the tables on the Big Boys, gain customers and turn a profit. In many ways, it’s free enterprise at its best.

Before business owner Greg Parker started his PumpPal program at his chain of convenience stores in Georgia and nearby South Carolina in 2011, buying gas was truly a sweetheart deal — for the credit card companies.

That’s because many people pay with plastic to fill up. Who carries an extra $50 cash for gas these days?

But Visa and MasterCard don’t let customers do the swiping out of the goodness of their tiny, cold hearts. They’re in it for the money, too.

In return for the convenience of these electronic payments, credit card companies sock merchants with a surcharge of 1.5 to 3 percent. When attached to tens of thousands of cash-free transactions annually, those little points add up to millions of dollars.

Which someone pays. But typically, it’s not the merchant. Instead, these surcharges are usually passed along to consumers through higher prices.

For big financial houses, this is easy money for almost no heavy lifting. Cash cows don’t get much fatter than this.

Then came the PumpPal program.

Parker cut out the cows by setting up a system that allowed customers to electronically pay for their gas by debiting their bank accounts. In return for their personal access, he discounted their pump price by up to 10 cents per gallon. But it didn’t cost his company an extra dime. Rather, this was money that Parker’s didn’t have to fork over to Visa and MasterCard in return for using a nanosecond of their computer time.

Parker initially cleared his new signage with the Ag Department. These roadside attractions were his biggest hooks for attracting PumpPal members. They worked like a dream. Thousands joined. Nearly everyone seemed happy about lower gas prices — except for a few competitors who were losing market share.

They complained that Parker’s signs were misleading. The state stunningly concurred, proving that it helps to have pals in public office. And the signs probably were a bit deceitful — to motorists who drool.

So Parker’s spent money on lawyers to fight the state, which eventually surrendered and gave the signs its blessing last May.

But it didn’t happen because of a sudden conversion to capitalism. Rather, the state recognized it was riding a loser, that Parker’s had sufficiently deep pockets and that he wasn’t giving up.

Game over for the old way. And game on for newer ways of attracting customers through membership programs.

Parker’s now reports that it has about 66,000 PumpPals who buy gas in the company’s 29 stores in this region. That’s almost half the population of the city of Savannah — an astounding number in such a short time. It proves that if you build a better mousetrap, people really will beat a path to your door.

And your gas pumps.

The Parker Companies estimate that it has saved customers $5 million since the program’s inception. That may be chickenfeed on Wall Street. But it’s real money to underdogs here.

And if you’re a David driving an old pickup, it feels good to treat Goliath like a speed bump.

Tom Barton is the editorial page editor of the Savannah Morning News. tom.barton@savannahnow.com